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Tax simplification from emerging technologies

Wouldn't it be great if future technological development enabled tax to be calculated and taken direct from the taxpayer without the need for the individual to do anything other than perhaps press a button?

HMRC's ambition is to become one of the most digitally advanced tax administrations in the world. This will benefit taxpayers, as it will lead to simplified interaction with the complexity of the tax code. It is important, however, that taxpayers retain an understanding of their tax responsibilities, not least so that they are able to challenge the tax authority if they think they have been charged too much tax.

The Office of Tax Simplification (OTS) gives independent advice to the government on simplifying the UK tax system and reducing the administrative burden. It has published a focus paper to inform public debate exploring the challenges and the opportunities that emerging technologies pose for tax simplification.

The OTS warns of the risk posed to taxpayers if software and technological advances reduce taxpayers' understanding of how much tax they pay and why. One way the OTS suggests the government mitigates this risk is by enhancement of the current personal tax account to include educational tools which deliver better-targeted guidance and information appropriate to the user’s needs and their level of understanding of tax.

The OTS will continue to look into the role of technology in tax and will gather evidence through an online survey in due course.

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To date, tax simplification has focused on removing complexities in order to make the tax system clearer for taxpayers and administrators. In the future, technology has the potential to manage the complexities of the tax system leaving taxpayers needing to only press a button to meet their tax obligations.